Stone Brewing Restructuring, Lays Off Employees

Citing slower growth and an increasingly more competitive craft beer landscape, San Diego’s Stone Brewing Company today laid off more than 50 employees as part of what it termed a “restructuring.”

Cutbacks extended across the entire organization, Brewbound has learned, including personnel in sales, marketing, media, administration, and production.

In a statement, new Stone CEO Dominic Engels, who joined the company on September 6, blamed the downsizing on “recent declines in domestic growth for the category and for Stone.”

“Due to an unforeseen slowdown in our consistent growth and changes in the craft beer landscape, we have had to make the difficult decision to restructure our staff,” he wrote.

Stone personnel would not respond to press inquiries on the record.

About 5 percent of the company’s staff, which has grown to about 1,100 as of last September, were impacted by the move, Engels said. No additional layoffs are expected in the “foreseeable future,” he added.

Engels said that the decision to downsize stemmed, in part, from “the onset of greater pressures from Big Beer as a result of their acquisition strategies, and the further proliferation of small, hyper-local breweries,” which he said has slowed growth amongst larger independent craft breweries.

“With business and the market now less predictable, we must restructure to preserve a healthy future for our company,” he wrote, noting that the decision to lay employees off was made to ensure profitability.

Stone also recently entered into a $90 million arrangement with private equity firm VMG Partners. VMG — which specializes in food and beverage investments and has purchased stakes in entrepreneurial ventures like KIND Healthy Snacks, Pirate’s Booty, Justin’s and Spindrift, among others — will invest $89.5 million into a recently formed limited partnership called “VMG Stone Brewing Coinvestment,” according to a June SEC filing.

Three former Stone employees who were informed of the layoffs this morning spoke to Brewbound under the condition of anonymity. They said the layoffs may have hit as many as 75 employees.

The employees told Brewbound they received 60-day severance packages and were offered career transition services.

For Stone, the cutbacks come on the heels of completing of two capital expenditure projects — a $25 million Berlin brewery and a $75 million Virginia brewery. The company is also planning to open a 10,000 sq. ft. pilot brewery and tasting room in Napa and recently agreed to license its name to a $26 million hotel concept in Escondido, Calif., where the company is headquartered.

One former employee who spoke to Brewbound believes those projects had an impact on the decision to restructure. The employee said that the new locations had not created the expected sales expansion.

Another former employee pointed to first quarter budget cuts and deferred bonus payments that, at the time, Stone brass said were needed to put toward the opening of the Berlin brewery.

“You have a well-known brewery with a great reputation that opens two full production breweries — the same size or larger than the original — and right after that goal is attained, they have to lay off a bunch of people in conjunction with bringing on a new CEO? I don’t think that is coincidence,” the employee said.

But in his statement, Engels praised the Berlin and Richmond brewery openings as “incredible accomplishments” that were “expanding the availability of Stone beers and boosting the reputation of American craft beer in Europe.”

The layoffs also come about four months after Brewmaster Mitch Steele announced he would depart the company to launch a new brewpub in Atlanta.

In a post on his personal Facebook page, Steele reacted to the news, saying “Feeling shocked and incredibly sad for many of my friends at Stone Brewing Co. How did it come to this?”

The three former employees who spoke to Brewbound also described a feeling of shock amongst many current and former members of “Team Stone.”

“It has been incredibly sad and devastating,” said one former employee. “These are some people who worked through the darkest days at Stone. No matter if it is a large company or not, these are people that loved working with each other.”

“It was pretty much emotional chaos for the remaining employees,” said another. “They had to watch us all pack up and leave. People were crying.”

Stone Brewing is the second craft brewery in the last 10 days to confirm cutbacks. Last week, Craft Brew Alliance laid off half of its brewery workers at a Woodinville, Wash. production facility.

Founded by Greg Koch and Steve Wagner in 1996, San Diego-based Stone Brewing Co. is the 9th largest craft brewer in the United States. Stone has been listed on the Inc. 500 | 5000 Fastest Growing Priv...